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Even Neiman Marcus is worried about the economy…

When the companies that serve the well-off start sweating the economy, does that mean it’s time for the rest of us to worry? Upscale retailer Neiman Marcus, which because it’s private doesn’t provide as much detail as other companies, filed its 10K yesterday and the words they chose sounded some pretty strong alarms:

The merchandise we sell consists in large part of luxury retail goods. The purchase of these goods by customers is discretionary, and therefore highly dependent upon the level of consumer spending, particularly among affluent customers. Accordingly, sales of these products may be adversely affected by an economic downturn, increases in consumer debt levels, uncertainties regarding future economic prospects or a decline in consumer confidence.

During an actual or perceived economic downturn (as a result of increases in consumer debt levels, increases in interest rates, a tightening of consumer credit, uncertainties regarding future economic performance and tax rates and policies, or a decline in consumer confidence, among other factors), fewer customers may shop our stores and websites. As a result, we may be required to take significant additional markdowns and/or increase our marketing and promotional expenses in response to the lower levels of demand for luxury goods. An economic downturn in the United States generally or in any of the geographic areas in which we have stores, particularly in Texas, California, Florida and the New York City metropolitan area, from which we derive a significant portion of our revenues, could have a material adverse effect on our business and results of operations.

The disclosure is a new one. And while Texas is largely OK, Florida is a pretty scary place these days for upscale anything. As Google Finance describes Neiman, the retailer is “not for the faint of finances”. But when those people start fainting over their brokerage statements, Neiman starts issuing warnings.

Apologies for the late post — I’m on the West Coast today to speak at the San Francisco CFA Society on financial blogging. If you’re in the area, please stop by — it should be a great event.

Image source: Neiman Marcus